investing in serbia
TRANSCRIPT
Armando Panvini
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This document seeks preliminary feasibility research and analysis of an
operational process which enables an enterprise or a network of enterprises,
scale economies in order to open commercial development of its own
product towards East European markets.
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Italy is the main suppporter of
Serbia's integration in the
European Union and, also for this
reason, has acquired very
important role of contact partner for
the country.
The country is growing, population'
spending power is increasingly
building up and italian products are
always well received in Serbia.
Represents, moreover, also an
important market to attend for own
products merchandise.
It's an ideal platform through which, with production investments or
cooperation agreements, huge and rapidly expanding markets (like Turkey,
Balcans, Russia and CIS-Countries) can be reached, which for italian SME
would otherwise be hard to reach directly: potentially a 800 million people
market.
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Serbia today is a stable country and in an extremely interesting
development and growth phase. The country, thanks to the Italian
support, goes towards a future membership in the European Union in a
clear and planned path. No italian company has closed, giving up on the
investment.
During the last years the country has witnessed very important changes,
before the global crisis had a consistent GDP growth tax, always
greater than +5%.
Serbia has inevitably suffered global crisis, but 2010 and 2011 ended with
1,5% GDP growth, while 2012 has ended with over 1%. (source: The
Statistical Office of the Republic of Serbia).
According to the last survey, october's 2012 unemployment rate stood at
25% (source: The Statistical Office of the Republic of Serbia), due both to
the privatising process taking place in the country in the last years, and to
effects of recent global crisis. Also for this reason the governemnt
strongly supports new investments from foreign investors, with
particular care of those bringing occupation.
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GDP Growth %
Inflation %
GDP: 31,14 billions euro (2011)
GDP per capita: 4,373 euro (2011)
2,5%
9,3%
5,4%
3,6%
5,4%
3,8%
-3,5%
1,0%
1,6%
1,1%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 IMFestimates
13,6%
7,3%
11,0%
8,6%
6,6%
10,3% 8,7%
5,1%
2005 2006 2007 2008 2009 2010 2011 2012first half
Source: National Bank of Serbia
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Fonte: Dati sul commercio estero Istituto Nazionale di Statistica
Year Exports from Serbia
Million €
Exports in Serbia
Million €
2005 525.1 732.8
2006 736.1 872.9
2007 799.5 1292.8
2008 763.3 1475.6
2009 586.1 1111.0
2010 843.9 1078.8
2011 936.6 1239.7
2012 first 8 months 507.7 902.5
Export - Import
Italy is Serbia's third commercial partner, after Russian Federation and Germany.
Exports from Italy to Serbia: vehicles, machinery, textiles, machinery for special use,
apparel.
Exports from Serbia to Italy: apparel, steel, iron, coloured metals, footwear, plastic
products.
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An actractive stimulus package is available to companies which decide
to develop their own business in Serbia.
A wide choice of combinations allowing companies to develop and
increase their own business in accordance with their model and - where
possible - enhance it.
The opportunities:
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Investments incentives in Serbia
Incentives offered by National Employment Agency
Tax exemption on companies' profits
Tax credit on profits
Temporary tax exemption on concessions profits
Losses report
Agreements preventing double taxation
Tax payment exemption on salaries and social security contributions
Tax deduction on annual incomes
VAT exemptions for free zones
Custom duties free imports
Local incentives
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Highly competitive tax system
• Personal income tax
Personal income tax at 12% of salaries.
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Annual incomes tax
Annual income is taxed in case its value rises above three times an average annual
salary in Serbia. Tax rate is at 10% of the annual retribution the value of which is
between 3 and 6 times the average annual salary of retributions in Serbia, and the
15% for the part of annual income exceeding 6 times the average salary in the
Republic.
Social security contributions
Obligatory contribution rates are:
I. 11% for retirement pension and disability insurance,
II. 6,15% for health insurance,
III. 0,75% for unemployment insurance
An average salary of ca. 400.00 € implies a cost of ca. 650.00 €
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Conditions:
Country of origin (51%) of merchandise must be produced in Serbia
Merchandise produced entirely of partially in Serbia
Merchandise subject to sufficient working and processing
Merchandise obtained or processed to the total value of 51% of ex-factory value
Purchase existence and direct supply are mandatory
Accumulation of origin only between Serbia and Russia
Merchandise supply must be accompanied by the cerficate of origin thereof
In order to establish merchandise origin a statement must be presented - merchandise certificate of origin, filling the FORM A, as required by global system of trade preferences (GSTP)
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hypothetical exercise for
the exporter in Russia
Production
€
Italy Serbia
Ex-factory value 10 000 000 10 000 000
Russia custom duty
20% for goods produced in Italy
1% for goods produced in Serbia
2 000 000 100 000
Value of good to import 12 000 000 10 100 000
Value plus VAT (18%) 14 160 000 11 918 000
Import Cost 4 160 000 1 918 000
An obvious Competitive advantage
Serbia-made goods with final destination in Russia costs
2.242.000€ less confronting the same goods produced in italy
(-15,84%).
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Free Zones are...
Delimited parts of Republic of Serbia's territory where activities take place
with many benefits for business. Preferential customs treatment, tax benefits
and a simplified administrative procedure all make investments in free zones
very interesting.
Free zones are locations highly specialized in technology,
telecommunications, modern infrastructures, industry e logistic support.
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Benefits...
• Fiscal benefits (exemption from any fiscal charge for direct investments,
VAT, Enterprise income tax)
• Custom duties and other import taxes shall not be due for import of goods
destined to business activity and in-place development.
• Financial benefits (free cash flow),
• Efficient administration (one-stop shop)
• Quick and simple customs procedures (every zones has its customs
office)
• Subsidies from local authorities for infrastructures usage (low cost
services)
• Supply of a range of services in preferential terms for users
(transportation, loading, reloading, consignment of goods, insurance and
banking services)
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QUICK ENTERPRISE REGISTRATION
After founding a company with a professional, a brief procedure will ease
and speed up the opening of your business.
Enterprise registration procedure in Serbia requires generally between 5
and 15 days.
Enterprise registration process at the Business Office of Records can
even be completed in just 3 days, with the exception of another small
delay in order to finalize procedures.
Enterprise registration process is cost-effective and economical, given the
cost of max 350 euros.
In Serbia different company models can be selected: stock company,
limited liability company, limited partnerships and general partneships.
The minimum capital required is 10.000 or 25.000€ for a stock company,
buying just a 500€ capital. For a LLC just 500€
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Trained personnel with high level foreign languages knowledge
Workforce in Serbia is reliable, with a high level of expertise in several
fields. Style of life and work results from strong cultural and business ties
with the West. Multilingual level is high - especially with english
language - almost unmatched by most other parts of central and oriental
Europe. People are highly qualified, productive and ready to commit.
Moreover, several Government-financed programs, through training and
development create qualified work groups. In This way a constant
stream of prepared and work-ready individuals is guaranteed.
Ideal time zone to serve europen customers. Serbia is located in the
center of South-Eastern Europe and has time zone in common with
majority of Western Europe countries (GMT +1), offering obvious
advantages over off-shore regions like India. Average distance from
Italy 500km: 5 hours over land/sea.
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MAIN FOREIGN INVESTORS IN THE COUNTRY
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Pro
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Three good reasons to evaluate development of your production
management in Serbia...
Investment safety More favourable conditions
for enterprises activity
Real chance to reach financial advantages in short/medium time
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According to aforementioned opportunities and considerations now is
possible to...
...actually evaluate opening to Serbian market both as a bridge to Eastern
Europe markets and as eventual market for further commercial
developments for the sale of your products;
...organize specific meetings with institutions operating in Italy (Rome
Embassy) for further information gathering and all kind of forms needed to
carry out the project;
...define an operative plan to establish a new company located in one of
the free zones of the country;
...plan a visit in the country for an inspection and first contacts with
competent authorities/administration;
...evaluate an external structure support in order to manage project and
start up;
